By Stéphane Hallegatte, Mook Bangalore, and Francis Samson Nkoka
Malawi is no stranger to significant flooding. In January 2012, floods affected more than 10,000 people and caused US$3 million worth of damage to households and infrastructure. But this year’s floods are much larger in magnitude, even unprecedented.
Beginning in early January, heavy rains triggered significant flooding in the southern and eastern districts of the country. The districts which experienced the largest impacts include Nsanje and Chikwawa in the south and Phalombe and Zomba in the east. So far, the flooding has affected more than 600,000 people, displaced over 170,000, and damaged agricultural crops covering more than 60,000 hectares.
While aggregate numbers and economic cost indicate the seriousness of the event, it is critical to look at exactly who is affected in the country. We have found that the poorest are on the front line.
Without concerted action, the world will one day see a megadisaster—a disaster resulting in over 1 million casualties.
The forces of population growth and rapid urbanization are dramatically increasing exposure to disaster risk. Over 600 million people, for example, live in the Ganges Basin of India, Nepal and Bangladesh. Due to the meeting of the tectonic plates with the Indian subcontinent shifting under the Eurasian continent, this area is at a large risk of seismic activity. And indeed, the Ganges Basin has seen earthquakes over magnitude 7.0 in the past 500 years, as illustrated by the graphic above.
As practitioners, we can help reduce disaster risk and build resilience to potential catastrophes through smart development practices. These practices, however, require targeted research that can inform which levers to move, and how to move them. Sadly, this kind of research is difficult to come by in the disaster risk management community, and harder still to communicate to those that need it most.
Can the world end extreme poverty by 2030? Will it be able to avert the worst effects of climate change or stop Ebola? These challenges are among the biggest we face today. In 2014, the World Bank Group tapped its knowledge, finance, and influence to confront global problems.
1) Taking on economic growth
In the wake of the financial crisis, developing countries were the engine of the global economy. In 2014, they faced new risks: lower growth, less financing, and lower prices for their commodities. In January and again in June, the World Bank urged developing countries to get their houses in order. Countries need blueprints to maintain the kind of growth that helped cut extreme poverty nearly in half globally in the last couple of decades. With the financial crisis fading, now is the time for developing countries to strengthen their economies so they can keep reducing poverty, according to the twice-yearly Global Economic Prospects.
What Happened Then?
A chemical gas spilled from a pesticide factory owned by Union Carbide. More than 40 tons of gas created a dense cloud over more than half a million people and killed thousands. None of the six safety systems at the plant worked to prevent the disaster. The company’s own documents prove the plant was designed with “untested” technology, and that it cut corners on safety and maintenance in order to save money.
The State of Bhopal Today
Today, clean-up of the site is still pending, those who survived the disaster don’t have alternate livelihood opportunities and victims are still suffering.
By Francis Ghesquiere and Olivier Mahul
This week, the Resilience Dialogue, bringing together representatives from developing countries, donor agencies and multilateral development banks, will focus on financing to build resilience to natural disasters.
There is growing recognition that resilience is critical to preserving hard won development gains. The share of development assistance supporting resilience has grown dramatically in recent years. New instruments have emerged in particular to help client countries deal with the economic shock of natural disasters. In this context, an important question is which financial instruments best serve the needs of vulnerable countries? Only by customizing instruments and tools to the unique circumstances of our clients, will we maximize development return on investments. Clearly, low-income countries with limited capacity may not be able to use financial instruments the same way middle-income countries can. Small island developing states subject to financial shocks where loss can exceed their annual GDP face vastly different challenges than large middle-income countries trying to smooth public expenditures over time or safeguard low-income populations against disasters.
Imagine you are a city official who wants to ensure all future infrastructure and urban development in your city is climate- and disaster-sensitive. The first step is to understand the natural hazards of today and tomorrow—flood, storm surge, sea level rise, etc.—and how they could impact your city. Thanks to higher-resolution geospatial datasets released this week by the U.S. Government, you will now be able to have a better understanding of the risks your city faces and how to manage them.
These newly available Digital Elevation Models (DEMs) were developed by the U.S. Government and detail the surface of the earth in 3D. By illustrating the geography and topography of an area, they enable users to quantify the potential destructive impact of water-related hazards. As a city official, you will be able to base your analyses on 3D maps showing the natural terrain and elevation of your city, which determine the path of the water.
In addition to their often devastating human toll, natural disasters can have an extremely adverse economic impact on countries. Disasters can be particularly calamitous for developing countries because of the low level of insurance penetration in those countries. Only about 1% of natural disaster-related losses between 1980 and 2004 in developing countries were insured, compared to approximately 30% in developed countries. This means the financial burden of natural disasters in developing countries falls primarily on governments, which are often forced to reallocate budget resources to finance disaster response and recovery. At the same time, their revenues are typically falling because of decreased economic activity following a disaster. The result is less money for government priorities like education or health, thereby magnifying the negative developmental impact of a disaster.
To address this problem, the World Bank Treasury has been helping our clients protect their public finances in the event of a natural disaster. The most recent innovation is our new Capital-at-Risk Notes program, which allows our clients to access the capital markets through the World Bank to hedge their natural disaster risk. Under the program, the World Bank issues a bond supported by the strength of our own balance sheet, and hedges it through a swap or similar contract with our client. The program allows us to transfer risks from our clients to the capital markets, where interest in catastrophe bonds is growing.
- cat bonds; catastrophe bonds; capital-at-risk notes program; CCRIF
- bond markets
- Disaster Response. disaster risk management
- Latin America & Caribbean
- Turks and Caicos Islands
- Trinidad and Tobago
- St. Vincent and the Grenadines
- St. Lucia
- St. Kitts and Nevis
- Cayman Islands
- Bahamas, The
- Antigua and Barbuda
In 1999, the state of Odisha, India, was hit by the most powerful tropical cyclone ever recorded in the North Indian Ocean, causing nearly 10,000 fatalities and US$5 billion in damages. For the next decade, the government of Odisha and partners worked to identify and mitigate cyclone risk. When the similarly intense Cyclone Phailin struck Odisha in October 2013, the region counted 99.6% fewer deaths.
We cannot prevent a monsoon or cyclone from striking – and as population growth, urbanization, and climate change are on the rise, the frequency and impact of natural disasters will increase. But with innovation, collaboration and a better understanding of risk, we can build communities that are more resilient to natural hazards.